Researchers found having a conversation which requires the driver to use their visual imagination creates competition for the brain's processing capacity, which results in drivers missing road hazards that they might otherwise have spotted.
"A popular misconception is that using a mobile phone while driving is safe as long as the driver uses a hands-free phone. Our research shows this is not the case," said Graham Hole from University of Sussex in the UK.
"Hands-free can be equally distracting because conversations cause the driver to visually imagine what they are talking about. This visual imagery competes for processing resources with what the driver sees in front of them on the road," said Hole.
According to Hole, the driver may also simply imagine the facial expression of the person they are talking to.
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"Clearly this research is not a green light to use hand-held mobile phones while driving, however," said Hole.
"The use of hand-held phones was made illegal primarily because they interfere with vehicle control; but our study adds to a mounting body of research showing that both hand-held and hands-free phones are dangerously distracting for drivers," he added.
They tended to focus their eyes on a small central region directly ahead of them. This led them to miss hazards in their peripheral vision. Undistracted participants' eye movements ranged over a much wider area, researchers said.
"Conversations are more visual than we might expect, leading drivers to ignore parts of the outside world in favour of their inner 'visual world' - with concerning implications for road safety," said Hole.
Researchers ran two experiments in which participants performed a video-based hazard-detection task. In the first experiment, participants were either undistracted, or distracted by listening to sentences and deciding whether they were true or false.
In the second experiment, researchers compared undistracted participants to ones who were distracted by a different visual imagery task.
This involved mentally moving around an imaginary grid in response to verbal instructions. Distracted participants were more likely to miss hazards in their peripheral vision due to the "visual tunnelling," researchers said.
The findings were published in the journal Transportation Research.